Explain Planning Under Capitalism And Socialism?

1 Answers

Muhammad Abdullah786 Profile
Under capitalism there is no authority who could perform the job of planning as under the system the resources are own by the private sector, the individual entrepreneur produce the goods and the individual consumers are independent in respect of consumption of goods. Here government does not make any compulsion in connections with the production of the goods rather it is the price mechanism which performs the function of exchange, production, allocation and distribution.

The free market forces are helpful in operating the whole economy. While the government remains confined to defense law and order etc. But after divesting effects of 1930s great depression and popularity Keynesian thinking, the capitalistic economies performs the following functions relating to economic planning.

Governments attempts to maintain effective demand so that inflation and deflation could be avoided. In this respect the fiscal and monetary measures are adopted.

Government doesn't allow the monopolies to grow as monopolistic forces obstruct the working of the market mechanism. In this connection government makes anti monopoly and anti cartel laws.

For the sake of community betterment of socialization government provides the basic facilities of health, education and recreation.

On the other hand in socialism there is a planning board. Such board formulated the plans which cover the whole economy. The central planning board has unlimited parts regarding allocation of the resources and production of goods.

To run socialist economy
Where market fails to make economic decisions, the determine prices becomes helpful
There should not be the trade cycles in the economy.
It is easy to face the unexpected circumstances.

Answer Question